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Members celebrate KiwiSaver house party with $0.5bn splurge

September 18, 2016

KiwiSaver schemes have supplied more than $1.1 billion to the New Zealand property market since 2011 with almost half of that figure flowing over the latest reporting period, figures from the Inland Revenue Department (IRD) show.

According to the IRD KiwiSaver annual statistics published last week, over the 12 months to June 2016 schemes paid out a total of almost $495 million under the ‘first home’ withdrawal rules.

The 2016 first home KiwiSaver payout is close to double the previous year’s effort when $258 million left the long-term savings regime to fund house purchases. Under a raft of changes introduced by the government last year, eligible members were allowed to virtually clean out their KiwiSaver accounts to help buy a first home with only the $1,000 ‘kickstart’ payment off limits.

Prior to the 2015 changes, any accumulated member tax credits (now set at an annual maximum of $521) were required to remain in member accounts approved for first home withdrawals. Since first becoming available, first home withdrawals have ramped up from $18.8 million in the 2010/11 fiscal period to the latest annual exit of almost $0.5 billion. Over 26,500 KiwiSaver members accessed first home withdrawals during the 12 months to June 30 this year compared to almost 16,200 in the previous annual period.

The first home figures do not include any further government subsidies – of up to $20,000 per dwelling – available under the HomeStart package.

Despite the first home withdrawals (as well as the almost $60 million paid out under financial hardship rules during the 2015/16 period), total KiwiSaver funds under management (FUM) increased from about $29.5 billion to $35.1 billion over the 12-month stretch to June 30 this year.

Of the increase in KiwiSaver FUM over the annual period more than $5 billion flowed via the IRD including almost $4.4 billion contributed by employees or employer – split between them respectively at about $2.7 billion and $1.7 billion.

Meanwhile, Crown contributions to KiwiSaver fell to about $687 million in the 12-month period, down from over $800 million the previous year. The drop in government support was due to the removal of the $1,000 ‘kickstart’ last year with residual payments of $35.4 million reported compared to $215 million over the 2014/15 period. However, member tax credits increased to $640.3 million from $580.3 million over the previous annual period, the IRD figures show.

KiwiSaver scheme transfers (excluding mergers and bulk transfers) also dipped slightly year-on-year, according to the IRD statistics, with 140,557 members swapping providers over 2015/16 compared to 157,809 in the year before.

While total KiwiSaver membership hit more than 2.6 million as at June 30 this year, the annual increase of about 118,000 was considerably below the approximately 180,000 reported over 2014/15.

The IRD figures show the number of KiwiSaver members under 18 has dropped to about 352,000 from almost 369,000 as at June 2015, reflecting the dampening effect of the kickstart removal.

About 600,000 KiwiSaver members had no reported income, according to the IRD statistics.

The total number of KiwiSaver accounts closed since inception rose above 150,000 over the year with retirement (86,708) the number one cause. However, permanent emigration (17,481) and death (15,481) have also trimmed KiwiSaver membership numbers over the years.

A further 24,241 KiwiSaver accounts have closed for ‘other’ reasons including invalid enrolment or court orders, the IRD figures reveal. Since 2008 236,436 individuals have opted out of KiwiSaver following auto-enrolment.